Diageo sees China as most resilient market in Asia

LONDON, Sept 30 Tue Sep 30, 2008 8:47am EDT

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LONDON, Sept 30 (Reuters) - The world's biggest alcoholic drinks group, Diageo Plc (DGE.L), sees China as the most resilient market in Asia despite turmoil on financial markets as the group moves towards profitability in the Chinese market.

"China looks particularly resilient ... Our overall view is that it is probably the most stable market in Asia," John Pollaers, President of Diageo's Asia Pacific region, told a briefing on Tuesday.

He said Diageo's whisky business in China was profitable and was helping fund growth in other areas such as Smirnoff vodka and Baileys liqueur. The group continued to gain market share over the last three months, while sales volumes were rising.

The Beijing Olympics in August saw a "slight slowing" in sales volume growth as the Chinese government moved to restrict the opening hours of clubs. Earlier this month, rival Pernod Ricard (PERP.PA) said it did not get any boost from the Games.

Diageo's Asia Pacific region, which covers a third of the world's population, includes fast-growing markets such as China, India and Vietnam and the more mature spirit markets of Korea and Australia. Its key brands in the region include Johnnie Walker and Windsor scotch whisky together with Bundaberg rum.

Pollaers said the group would look to expand in India and China, where it is under represented, by organic growth and selective acquisitions to build its presence in local spirits.

The Asia-Pacific region saw sales rise 4 percent to 877 million pounds in the year to end-June 2008, accounting for around 11 percent of Diageo's overall turnover. (Reporting by David Jones; Editing by Quentin Bryar)

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